Spot Gold Prices – January 26th 2009

The meteoric $50 move on Friday pushed spot gold prices through the strong resistance at $890 and the next technical target at $916 now comes into play. After a move of this magnitude there is a strong possibility of profit taking early on but gold will need to fall below previous resistance at $866 before the chart begins to start looking weak, and the possibility of a short term trend reversal. The key driver (in tandem with technical buying) for the spot gold price on Friday was the renewed “safe haven” status of gold which is exacerbated even more in the wake of the strengthening U.S. Dollar. Dollar-denominated gold, whose price generally moves inversely with the US dollar, was in step with the prices of both base and precious metals, following rising concerns of recession and economic slowdown in economies worldwide, with the run-up in spot gold prices coming despite the dollar’s spike to a 23-year high against sterling and a six-week peak against the euro. It is important to note the crossover in the 9 day and 14 day moving averages, and with the 40 day moving average providing a support line, this move could be confirmed for spot gold in the next few days.
The short term trend is up, the medium term trend is sideways while the long term trend is bullish.